Sun, spending concerns weigh on Nasdaq
A gloomy report on consumer confidence and worries about a midquarter update from Sun Microsystems pulls the Nasdaq down.
The Nasdaq fell 47.42, to 1,864.98, and the Dow Jones industrial average was off 160.32, to 10,222.03.
Consumer confidence, a report that helps economists predict how much consumers will spend in coming months, came in below expectations and hit a new low for the past four months. The Conference Board said its monthly index of consumer confidence fell to 114.3 in August. Analysts had been expecting confidence to come in at 117.5 points, up slightly from 116.5 points last month. Consumer spending has been among the few strong areas of the economy.
Though investors took the report as bad news, analysts saw it as fairly neutral. "Despite the deterioration, confidence is higher than it was earlier in the year and remains well above recessionary levels. Consumers have kept the economy out of recession, and it appears they plan to continue spending," said Merrill Lynch analyst Bruce Steinberg.
Company news also weighed on the Nasdaq on Tuesday.
Sun Microsystems fell 94 cents, or 6 percent, to $13.56 ahead of Wednesday's midquarter conference call. Goldman Sachs analyst Laura Conigliaro lowered estimates for the company's first quarter and 2002, saying she now expects $3.7 billion in revenue and a penny a share in earnings for the company's current first quarter. First Call's consensus estimate calls for earnings of 2 cents a share. Conigliaro added that "demand improvements are still being frustrated by the macroeconomic environment."
Altera, which is expected to reiterate its outlook Wednesday on its midquarter conference call, was off 26 cents, to $29.96.
"We expect the company to reaffirm its guidance of 15 percent to 20 percent sequential revenue decline for the September quarter," said WR Hambrecht analyst Jim Liang. According to Liang, checks with customers have shown "that August and July saw continued stabilization" in the company's North American business.
Even Rambus, which had been one of the Nasdaq's more active gainers Tuesday morning, was off 39 cents, to $6.98. Shares were rising on news that new Intel microprocessors will use the company's memory technology.
Shares of chipmaker Texas Instruments also fell despite positive news. They were off 29 cents to $35.71 although the company's chief operating officer, Richard Templeton, said at a news conference in Taipei that the company is seeing the first signs of a rebound in global demand for handsets, as wireless-phone makers place new orders for equipment, according to a Bloomberg report.
Computer Associates fell $1.29, to $32.71, as Texas financier Sam Wyly's two-month long battle to replace the software company's board approaches its climax in tomorrow's shareholder meeting.
Among other heavily traded tech issues, Intel slipped 64 cents, to $28.51, Microsoft fell $1.57, to $60.74, Oracle fell 92 cents, to $14.01 and Cisco Systems slipped 92 cents, to $17.09.
Amazon.com fell 16 cents, to $9.97, AOL Time Warner fell 95 cents, to $40.70 and Yahoo lost 42 cents, to $13.
Staff and Reuters contributed to this report.